What is GovTech, and why is it so important for startups and our future?

By Alex Borg

Alex Borg is a founder of GBU Ventures Ltd, a consultancy that advises on startup coaching and fundraising

In 2015, when I came up with the concept of asking startups to solve a problem in government, I wasn’t aware that this approach would eventually become an accepted method for many governments to innovate the services they provide to citizens and businesses. At the time I was working at the Malta IT agency (MITA) which, like many government agencies, struggled to cope with the mobile app explosion. Citizens had become so used to the immediacy and user friendliness of apps like Google maps, Hangouts, iTunes and Uber that government online services looked like a thing of the past if they weren’t accessible by phone.

After launching the first pilots, it became clear that startups were focused on solving a problem, they were fast and agile in learning and implementing, and were not hindered by past legacies. In addition, they were given a tight timeline within which to deliver. But most impressive was that startups could come up with an idea for a new service which still didn’t exist.

The above, in a nutshell, captures how digital government transformed into GovTech using open innovation approaches. The word Tech takes its cue from the different markets which startups specialize in. For example, HealthTech, EcoTech and FinTech respectively deal with the application of technologies to healthcare, environmental sustainability and financial services. In its more extreme interpretation, GovTech is about how governments engage with external entities that include citizens, NGOs, social entrepreneurs, researchers, startups and SMEs to unlock innovative government services using emerging technologies. Though here too, the terms “government services” need to be qualified.

Traditionally governments have provided services to their communities based on the classic life cycle. For example, registering a birth or a notarial deed, providing public healthcare services, collecting taxes, paying out social benefits, supporting justice systems, and many others. However, life today has become extremely more complex: there are many citizens and businesses’ needs which currently governments strive to service properly. With the data that governments can make available, in combination with emerging technologies such as artificial intelligence, the Internet of Things, quantum computing and blockchain, a plethora of new services in the community can be created. But the beauty of it, is that these services are increasingly blurring the boundary of what is a government service and what is ultimately a complementary community or infrastructural service offered by a startup, whose mission is to solve a societal problem. Examples are mobility apps such as Bolt and Uber that are solving a huge mobility problem, or even payment apps like Wise and Revolut that have addressed a serious problem of fast foreign currency payments in a high globalized world.

The benefits of this revolution are immense. Beyond creating new services that still don’t exist, adopting these open innovation approaches creates the right context for collaborating with the above-mentioned external entities to solve real world challenges such as healthcare and education for all, homelessness, climate change, pollution, portable and clean water, terrorism, racism, unemployment and many others. And many governments like those of the UK, the US, Estonia, Lithuania, Denmark, Brazil and New Zealand are literally pumping millions in accelerators that include a GovTech programme. Examples are In-Q-Tel in the US, Accelerate Estonia and Creative HQ in Nez Zealand. These initiatives often don’t care whether the ideas span beyond strictly government because they know that like that they are enabling an innovation ecosystem for entrepreneurs to discover new markets and services that in the end contribute to the socio-economic fabric of the country.

The creators of this revolution, in their large majority startups and SMEs are not only innovating, creating jobs and contributing talent. They are generate huge multipliers that in their totality exceed the public investment made in GovTech approaches using startups and SMEs as an innovation marketplace.

The size of the global GovTech market was estimated at USD €350B in 2018 by Accenture, and expected to reach USD 1 Trillion by 2027 by Maia Research in their Global Gov Tech Market Research Report 2022. Much of this will represent a huge contribution to the world economies in a post-Covid pandemic and post-Russia-Ukraine war recovery scenario.

More than that, such an innovation revolution, may not only represent a push towards democratization — in other words a more level playing field for technology players and users alike — but a way to accelerate the resolution of some of the world’s real-world problems through emerging technologies and data.